FrieslandCampina uncertain about the 2nd half of 2014, as profits fall in 1st half

In announcing its results for the first half of 2014 FrieslandCampina stated that it is uncertain how the dairy trade will devlop in the second half of the year.

In the first half of 2014 the revenue of Royal FrieslandCampina rose by 3.5% to €5,713million. Organic revenue growth amounted to 5%. Higher sales prices contributed towards the revenue growth.

The most robust growth was achieved in China, Hong Kong and the Philippines. The sales volume of infant nutrition increased. Sales volumes of dairy-based beverages, cheese and ingredients decreased due to unfavourable market conditions in Europe, Indonesia and Vietnam.

Profit fell by 60 million euro (36.6%) to €104 million due to a negative currency translation effect amounting to €44million and pressure on margins for commodities. The pro-forma milk price over the first half of 2014 totalled 44.19 euro per 100 kilos of milk.

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In its outlook for 2014 the company said: “The worldwide offering of milk is expected to increase still further in 2014. How the demand will develop is uncertain. In a number of European countries the markets will remain under pressure. As a consequence of the Russian boycott of dairy products, alternative products and markets must be found to offset the volume of milk exported to Russia, primarily in the form of cheese.”

FrieslandCampina stated that it cannot make any concrete statement regarding the expected result for the whole of 2014.

Cees ’t Hart, CEO Royal FrieslandCampina: “The combination of a strong euro, a high milk price, falling sales in a number of Asian markets and general political unrest all affected FrieslandCampina’s results during the first six months of 2014. Despite these developments, higher sales prices led to a further growth in revenue. In the consumer market, infant nutrition, which is one of our strategic growth categories, performed especially strongly.”